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10 Tips
TO TAKE OVER A BUSINESS SUCCESSFULLY
Tip 1: Prepare your project for a successful business takeover
Before moving on to the operational phase, it is essential to reflect on your motivations and objectives for the operation. There may be many reasons for taking over a business, and any lack of clarity about these reasons will make it difficult for sellers to consider your case. In addition, a financial or even personal assessment is an essential prerequisite for the operation.
Tip 2: Don’t take over a business alone
To successfully take over a business in all its aspects (financial, tax, legal, and technical), it is necessary to surround yourself with specialists from the preparation phase onwards. Do not rely on the seller’s advice to help you. They represent only the interests of the seller and would be in a conflict of interest and would incur professional liability if they advised you. It is preferable to join a buyers’ club and be accompanied by a “buyer’s” consultancy firm for both the audit and negotiation phases. A “buyer” consultancy firm is an excellent solution for giving credibility to your approach in the eyes of sellers and especially their advisors.
Tip 3: Define your target precisely
Failing to identify a precise target will inevitably lead to failure. Do not believe that by increasing the range of targets, you will increase the chances of success. On the contrary! Mergers and acquisitions firms appreciate buyers who have a precise target and stick to it. However, if you only look for a company in your region with a profitability of more than 10%, you increase the risk of failure.
Tip 4: The seller chooses the buyer
Many takeovers fail due to a lack of understanding of the seller’s psychology. The seller has often spent several decades of their life setting up and developing a business that supports their entire family and many employees. They are not selling a piece of real estate but rather a part of themselves. The relational and emotional aspect of the negotiation is often a determining factor. The buyer must, therefore, appeal to the potential seller. Cases of sellers deciding to sell at a lower price than they initially decided are not uncommon when the buyer manages to create a climate of trust that reassures the seller that the business will continue to exist.
Tip 5: Be a risk manager
To successfully take over a business, adopt a risk management approach. First, identify the risks of the takeover, particularly in financial terms (profitability, etc.), strategic terms (is the company in a buoyant market?), legal terms (does the company have well-drafted commercial contracts?), tax terms (has the company not taken certain ill-considered risks), environmental terms (does the company comply with anti-pollution standards?), and social terms (is the social climate good?). Once these risks have been identified, assess and rank them from the lowest to the highest in terms of claims. Ultimately, deal with these risks through insurance, guarantees, or transfers.
Tip 6: Approach the financial side of the business with regard to its impact on the tax and legal side
You must involve the seller in the sale process. To do this, it is recommended that both parties pre-contract their intentions in a joint letter of intent. A well-prepared promise helps limit future discussions and disagreements by setting out very precise suspensive and resolutive conditions as well as any resulting indemnities.
The guarantee of assets and liabilities must be carefully drafted by a specialist if its provisions are to be implemented. You will need to negotiate the seller’s commitments, in particular, their resignation from the board of directors, their possible support, and a non-competition and non-solicitation clause for the future.
Tip 7: Keep your legal hand in check
Exercise caution before writing a letter of intent, requesting exclusivity, signing a promise, a sales contract, a guarantee of liabilities, etc. Try to involve the seller and their advisor from the letter of intent onwards. Do not hesitate to send your draft letters of intent to the seller’s advisor before sending them to their client. Ideally, discuss the letter of intent with the seller’s counsel in one or more working meetings. This will greatly increase your chances of having the LOI accepted, as the seller’s counsel knows the negotiating leeway of their client.
Tip 8: Price is not everything
To successfully take over a company, do not focus solely on the sale price of the target company. Try to take a global approach to the value of the company by looking at the future. The future potential of the business is much more important than the price you pay at the time of signing, and it is often only 2 or 3 years later that you realize whether you paid too much or not.
The involvement of the seller in the takeover process also appears to be an important guarantee of success for the buyer. Don’t forget that the time they spend with you during the support period is sometimes more valuable than the price you will pay.
Tip 9: Without financing there can be no takeover
As with any business creation or development project, financial partners will look for a project whose risk is in line with the expected rate of return (IRR). To convince them, whatever the set-up, the essential element lies in the ability of the people involved to make this transition and the subsequent development a success. The commercial, technical, and financial credibility of the buyer will be decisive. The experience and confidence of the company’s staff will also be crucial. Finally, the quality of the strategic, operational, and financial business plan must be impeccable.
Tip 10: Adapt yourself after the takeover
Have you taken over? Be careful, you are changing your status. You are no longer an employee or company director but are taking the place of a company director in a company you do not know. Be humble and never criticize past management towards anyone.
Seek advice at this stage, whether it is your first experience as a manager or an external growth operation. Listen to the advice of experts, employees, and other stakeholders to ensure a smooth transition and successful management of the business.
FAQ
What services does Actoria provide?
Actoria specializes in mergers and acquisitions advisory for small and mid-sized businesses. Our services include company sales, succession planning, buy-side and sell-side mandates, business valuation, financial diagnostics, investor sourcing, negotiation support and full transaction execution until closing.
Who does Actoria work with?
We support SME owners, family-business leaders, shareholders, entrepreneurs, private investors, and corporate groups seeking to acquire or divest businesses in Europe and North Africa.
In which countries does Actoria operate?
Actoria has local teams in Switzerland, France, Belgium, Luxembourg, Morocco and Tunisia, and manages cross-border deals across Europe, Africa and the Middle East through an international buyer network.
How many potential buyers are in Actoria’s network?
Our proprietary network includes more than 6,500 qualified industrial buyers, strategic acquirers and financial investors, allowing us to match sellers with high-quality counterparties.
Does Actoria support confidential business sales?
Yes. Confidentiality is fundamental to our process. All discussions, documentation and buyer approaches are handled discreetly to protect the interests of the seller and the business.
What industries does Actoria cover?
We advise companies across multiple sectors, including industrial production, manufacturing, services, IT and digital, healthcare, logistics and distribution, construction, and specialized B2B services.
What is the typical size of businesses Actoria represents?
We primarily advise SMEs with revenues generally ranging from CHF/EUR 2 million to 100 million, depending on jurisdiction and market.
How does Actoria determine the value of a business?
We perform detailed financial and strategic analysis using multiple valuation methods, including discounted cash flows, market multiples, asset-based methods, and sector benchmarking.
How long does a business sale process take?
A standard transaction typically takes 6 to 12 months depending on market conditions, buyer interest, company complexity and diligence requirements.
Why choose Actoria as an M&A advisor?
With over 20 years of experience, a senior advisory team, a structured methodology, and an extensive network of qualified buyers, Actoria delivers independent advice, tailored execution and strong transaction results for SME owners.
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Actoria has swiftly identified the inefficiencies in our company’s processes, proposed optimizations, and implemented them effectively. Furthermore, Actoria has provided outstanding support throughout all stages of our company’s transfer to a group within our industry. This includes preparing our company, identifying potential buyer partners, and negotiating up to the point of the partner’s capital entry. Actoria delivered expert negotiation skills and secured a valuable partner for us.
We were quite anxious to find a solution, as my health was deteriorating rapidly. Actoria’s consultant played a crucial role in the successful completion of my company’s sale. Their involvement was essential in executing this delicate project, as it impacted our daily operations. This project, which was close to my heart and increasingly necessary, was made possible thanks to the decisive momentum provided by Actoria.
First, Actoria conducted a thorough assessment of our company’s strengths and weaknesses, and then suggested incorporating these insights into our management approach to enhance our company’s value. Actoria led this project alongside my entire management team, enabling the involvement of all key personnel, and swiftly implementing a solution that allowed an investor to enter our capital. This was complemented by the inclusion of some of my company’s executives and a bank.
I couldn’t be happier with the result, but I am especially pleased with my decision to work with Actoria. The success of this mission was the direct result of Actoria’s hard work and sophisticated professionalism on my business. From our first meeting through the reasonable preparation process, all phases of the transfer, legal and financial operations were managed by the Actoria team. Their skills were even more evident when the complexities of this transaction were at its peak.
Hiring Actoria made the difference to achieve my original goal and move on to my next professional challenge. Selling a company like AMR in this market has not been an easy task. Actoria has demonstrated perseverance in identifying good buyers with knowledge of my industry in order to continue the development of my business, and has provided professional advice throughout the process.
The company’s sales process was a lengthy and challenging journey. The professional support from Actoria made this endeavor much more manageable. I would like to extend special thanks to the consultants from Switzerland and France for their highly effective collaboration. Your consultants proposed creative solutions during the negotiations, which effectively overcame significant obstacles in order to finalize the agreement. Their experience, knowledge, and professionalism played a crucial role in the success of this transaction.